ETHICS & CORPORATE

GOVERNANCE
introduction
BUSINESS ETHICS

 Ethics is a branch of social science. It deals with moral principles

and social values. It helps us to classify, what is good and what is
bad? It tells us to do good things and avoid doing bad things

 Moral principles that govern a person's behaviour or the conducting of an activity.

 Business ethics (also known as corporate ethics) is a form of applied ethics or

professional ethics that examines ethical principles and moral or ethical problems
that arise in a business environment. It applies to all aspects of business conduct and
is relevant to the conduct of individuals and entire organizations.
DEFINITION
 According to Andrew Crane,
 "Business ethics is the study of business situations,
activities, and decisions where issues of right and
wrong are addressed."According to Raymond C.
Baumhart,
 "The ethics of business is the ethics of responsibility.
The business man must promise that he will not harm
knowingly.".
NEED FOR BUSINESS ETHICS

 Stop business malpractices

 Safeguarding consumer’s rights
 Gain confidence of customers
 Survival and growth of business
 Creating goodwill
 Healthy competition
 Consumer satisfaction.
 Building strong relationship with customers and clients
ELEMENTS OF BUSINESS ETHICS

 Formal Code of Conduct:

 Ethics committee:
 Ethical Communication:
 Ethics office:
 Disciplinary system:
 Ethics training programme:
 Monitoring:
MORAL
 A person who knows the difference between right and
wrong and chooses right is moral.
 A person whose morality is reflected in his willingness
to do the right thing – even if it is hard or dangerous –
is ethical.
 Ethics are moral values in action
VALUES
 According to the dictionary, values are “things that
have an intrinsic worth in usefulness or importance to
the possessor,” or “principles, standards, or qualities
considered worthwhile or desirable.”
 However, it is important to note that, although we
may tend to think of a value as something good,
virtually all values are morally relative – neutral, really
– until they are qualified by asking, “How is it good?”
or “Good to whom?
DIFFERENCE BETWEEN MORALS &
VALUES
 Morals are generally taught by the society to the
individual whereas values come from within.
 Morals act as a motivation for leading a good life while
values can be called as an intuition.
 Morals are related to ones religion, business or politics
whereas values are personal fundamental beliefs or
principles.
 Morals are deep seated whereas values keep on
changing with time and needs
UTILITARIANISM
 For the utilitarian, the just action is that which, relative
to all other possible actions, maximises utility or “the
good” (defining “the good” is the subject of
philosophical conjecture and beyond our scope here).
This is the utility principle.
 Utilitarianism is solely consequentiality; the justice or
injustice of an action or state of affairs is determined
exclusively by the consequences it brings about. If an
action maximises utility, it is just
UNIVERSALISM
 Universalism, in a general sense, is an idea or belief in
the existence of a universal, objective or eternal truth
that it determines everything, therefore, is and must
be equally present in all human beings. 
 A universalist thinking ensures the accuracy of a way
unique or specific view, explain, or organize the world.
 The difference between personal and
professional ethics. ...
 Professional ethics refers to the ethics that a person
must adhere to in respect of their interactions and
business dealings in their professional life. In some
cases, personal and professional ethics may clash and
cause a moral conflict.
 Ethics refers to the guidelines for conduct, that
address question about morality.
 Value is defined as the principles and ideals, which
helps them in making the judgement of what is more
important. 
 Ethics is a system of moral principles. In contrast
to values, which is the stimuli of our thinking
THEORY OF RIGHTS

 A right is described as an entitlement or justified claim

to a certain kind of positive and negative treatment
from others, to support from others or non-
interference from others.
 Rights belong to individuals, and no organization has
any rights not directly derived from those of its
members as individuals; and, just as an individual's
rights cannot extend to where they will intrude on
another individual's rights, similarly the rights of any
organisation whatever must yield to those of a single
individual, whether inside or outside the organization
 In simple words, rights are the common claims of people which every
cultured society recognizes as essential claims for their development,
and which are therefore enforced by the state.

 According to Laski, “Rights are those conditions of social life without

which no man can seek in general, to be himself at his best.”

 Main features of Rights:

 Rights exist only in society. These are the products of social living.

 Rights are claims of the individuals for their development in society.

 Rights are recognized by the society as common claims of all the

people.

 Rights are rational and moral claims that the people make on their
society.

 Since rights are here only in society, these cannot be exercised

against the society.
 Rights are to be exercised by the people for their development which
really means their development in society by the promotion of social
good. Rights can never be exercised against social good.

 Rights are equally available to all the people.

 The contents of rights keep on changing with the passage of time.

 Rights are not absolute. These always bear limitations deemed

essential for maintaining public health, security, order and morality.

 Rights are inseparably related with duties. There is a close relationship

between them “No Duties No Rights. No Rights No Duties.” “If I have
rights it is my duty to respect the rights of others in society”.

 Rights need enforcement and only then these can be really used by
the people. These are protected and enforced by the laws of the state.
It is the duty of a state to protect the rights of the people.
THEORY OF JUSTICE
 A Theory of justice is a 1971 work of political philosophy and
ethics by John Rawls, in which the author addresses the
problem of distributive justice the socially just distribution of
goods in a society.
 In A Theory of Justice, Rawls argues for a principled
reconciliation of liberty and equality that is meant to apply
to the basic structure of a well-ordered society
 These theories advocate that all persons should be guided
by fairness, justice and equity and a sense of impartiality.
BUSINESS STANDARDS:
 Standards are the agreed way of doing
something. Standard can cover huge range
of activities undertaken by organizations and
used by their customers.
 Standards may be classified as

 Government or statutory agency standard

and specification enforced by law.
 Propriety standards developed by firms or
organizations and placed in public domain.